Closing a Bank Account

If you've found another bank more accommodating to your needs, it could be time to move on. Following the below procedures will make cancelling your old account and opening your new one a simple and painless process.

Forever, how do I close my bank account?

There are typically three ways to close a bank account: You can terminate your bank account by visiting a branch, sending a letter, or calling customer service.

It's crucial to take certain preliminary measures before closing an account to ensure no outstanding direct deposits or bill payments. Instructions, in order, are as follows:

Make Payments or Arrangements for Past Due Amounts

If your bank account has a negative balance, they will likely not let you close it. However, if the negative balance persists for a long time, the bank may cancel the account and forward the unpaid debt to collections. If you have an outstanding debt that has been turned over to a collections agency, it might hurt your credit score.

An unpaid overdraft will also appear on your ChexSystems report, a record of your banking behaviour that many businesses want before opening a checking account. If you want to avoid having your applications rejected because of a lack of funds, you should clear up any outstanding balances in your bank accounts.

Ensure That All of Your Automatic Payments and Deposits Are Up to Date

You should change the account details for automatic payments or direct deposits to reflect your new bank account. Reviewing your bank statements is a great place to start if you want to ensure you get all the outstanding automated bill payments.

Be on the lookout for any letters from employers or creditors who may be experiencing trouble issuing or collecting payment. Unpaid invoices that have been sent to collections owing to erroneous billing information can have the same negative effect on your credit score as a negative bank balance.

Take Out the Money and Shut Down the Account

You can deactivate your previous account after all pending direct deposits and payments have cleared and the funds have been transferred to your new account. You can get your money out of the account via electronic transfer or paper cheque.

Account cancellation procedures vary by financial institution but are often detailed on the institution's website or within the deposit account agreement.

For how long will the bank take to close the account?

Your bank may immediately comply with your request to cancel your account if it has a zero or positive balance and no outstanding transactions. However, delays may occur if there are any outstanding payments or transactions. That's because you won't be able to terminate the account until the balance is positive and until any pending deposits or payments have cleared.

What Is the Process to Reopen a Closed Bank Account?

When you close your bank account, you can't open it again afterwards. Still, there's a caveat: some financial institutions may be willing to reactivate a closed account if another payment or deposit is received. Before making any post-closing financial moves, review the banking agreement's provisions.

After discovering that a previously closed account has been reopened due to a new transaction, you should either withdraw the funds or deposit fresh ones to settle the account. Then, shut the account down again, and give your new banking details to the individual who paid or billed you.

When my bank account is closed, would it affect my credit score?

Closing a bank account will not directly affect your credit because bank accounts do not contribute to your credit score and are not included in your credit report. As long as you don't shut your account with a negative balance, this should be fine with your credit score. Your credit may take a hit if you try to close an account without first paying any outstanding overdraft or fee charges.

Briefly Summing Up

If your account is current, cancelling a bank account is a simple process that won't affect your credit score either way. Knowing the contents of your credit report is a great first step if you want to take measures that can boost your score.

You can view your Experian credit report and credit score for no charge. You may get your credit report and score immediately if you sign up for a free Experian membership. In addition, you'll be provided with complimentary credit monitoring so that you may keep an eye on your credit and take corrective action if necessary.